American Oil and Gas Reporter - January 2012 - 214

article in a local newspaper that explained
crude oil-then at $9 a barrel-was never
cheaper since the first oil well at Titusville, Pa., in 1859.
Until 2001, our company struggled to
meet expenses, let alone accumulate the
capital to invest in drilling new wells and
further develop leases. In 2002, the oil industry saw the crude oil price rise to $25
a barrel and we began to drill, develop, and
expand.
That turning point and continued price
increase is the inevitable result of two
decades of neglect caused by poor economics. Add this fact to some central
banks' goofy monetary policies, throw in
a fair measure of fear attributable to our
country's dependence on oil imported
from folks who don't like us, stir in a dash
of various antics arising from anti-oil
politics and regulations, and you have a
recipe for the experience of the last several years: high crude oil prices and unprecedented volatility. This phenomenon
is not unique to the oil business, as we also
have seen a similar mixture of events and
results played out in the agriculture and
mining industries.
An Absolute Necessity
When BG-5 was asked to join EKOGA,
I readily accepted. Through our cattle and

farming operations, I have experienced
firsthand the value of industry organizations and the impact they can have on businesses from our involvement with organizations such as the Kansas Livestock Association and the Kansas Corn Growers
Association. It appears most Americans
view political lobbying as self-serving and
worthy of banishment from the political
process. That distrust has become more intense with accounts of lobbyists blurring,
and sometimes crossing, the lines of
morality and legality. While these are the
exceptions, not the rule, such stories draw
the public eye and influence people's attitudes about lobbying.
However, my involvement with different industry associations has taught me
that lobbyists are an absolute necessity if
our political system is to function efficiently and at its highest potential. I also
believe that the need to be politically correct often can dilute an intended message
to the point that it loses its meaning and
renders it unclear, unfocused, and easily
forgotten. We charge our lobbyists to enlighten policymakers with facts related to
the issue at hand and to make our important messages clear, focused, and undiluted.
Lobbyists are attempting to educate
lawmakers about the important issues
surrounding the energy industry at both the

federal and state levels. Washington has a
great need for voices speaking to the different levels of government to ensure the
facts are taken into consideration without
political bias.
One of the hottest topics under discussion is the threat of eliminating industry tax
incentives that have been in place for
decades. It is the lobbyists' goal to educate
key policymakers, both Republican and Democrat, in the Senate and House, with the
message that eliminating percentage depletion and intangible drilling costs-even
in exchange for lower corporate rates-would
constitute a tax increase on our industry
that would cost thousands of jobs and
make the United States more dependent
on foreign oil. The allowance for depletion, the expensing of IDCs, and the
marginal well tax credit are important incentives that have helped encourage continued U.S. production, development,
and exploration. Eliminating them would
damage the entire nation's oil and gas
commerce and the industry, including that
in eastern Kansas.
The United States is the world's thirdlargest oil producer, but it also is the
world's largest consumer. Eliminating
the tax incentives will ensure that this country will not become energy independent
and all but guarantee our dependence on

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American Oil and Gas Reporter - January 2012

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